RIYADH: Saudi Arabia announced a record budget deficit and cuts to fuel and utility subsidies on Monday as the oil powerhouse suffers from a drastic fall in global crude prices.
Petrol prices in the kingdom were to rise by more than 50 percent on some products from Tuesday, authorities said, after the world's largest crude exporter said it had posted a deficit of $98 billion in 2015.
Riyadh also projected a shortfall of $87 billion in next year's budget, the first since King Salman took over the country in January.
The finance ministry said in a statement that revenues in 2015 were estimated at 608 billion riyals ($162 billion), the lowest since 2009 when oil prices dived as a result of the global financial crisis.
The budget "comes amid challenging international and regional economic and financial conditions" including "very low oil prices," the statement said.
The 2015 deficit is the highest in the history of Saudi Arabia, which relies on oil for 90 percent of public revenues, but was not as big as some expected.
Income for 2015 was 15 percent lower than projections and 42 percent less than in 2014, after oil prices fell by almost two thirds since mid-2014 to below $40 a barrel.
The dive is largely due to Saudi Arabia's own policies and those of other OPEC nations, who are refusing to cut oil production as they seek to drive less-competitive players, including US shale producers, out of the market.
Oil prices slid in response to Monday's statement, with the US benchmark West Texas Intermediate losing $1.29 to $36.81 a barrel, while Brent crude shed $1.27 to $36.62 a barrel in London.
The International Monetary Fund had projected the 2015 deficit to be around $130 billion and other reports also put it above $100 billion.
The ministry said oil income made up just 73 percent of total revenues in 2015, way below its contribution in previous years. Meanwhile, non-oil revenues rose 29 percent to $43.6 billion.
The 2016 budget projects revenues at $137 billion, the lowest in six years, and spending at $224 billion, slightly below 2015 projections of $229 billion.
Spending this year came in at $260 billion, the ministry said, almost equal to 2013 expenditures and down 6.6 percent from 2014. Saudi Arabia normally overspends its budget projections by around 20 percent.
Comments
Comments are closed for this article.